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 TABLE OF CONTENTS Page
1. Accounting cycle 3

2. The need for financial statements 3

3. Desirable characteristics of financial statements 4

4. Factors affecting the financial statements 4

5. Interested stakeholder 5

6. Format of an income statement 6

7. Format of the balance sheet and notes to the balance sheet 7

8. Cash flow statement 11

8.1 Operating activitiy 12

8.2 Investing activity 18

8.3 Financing activity 19

8.4 Format of the cash flow statement 21

THIS BOOKLET CONSIST OF 23 PAGES

1. ACCOUNTING CYCLE

INCOME STATEMENT

BALANCE SHEET

CASH FLOW STATEMENT

Pre-adjustment Trial Balance

•Adjustments

Post-adjustment Trial Balance

•Closing Transfers

Post Closing Trial Balance

2. THE NEED FOR FINANCIAL STATEMENTS

§ Financial Statements are needed for decision-making purpose.
§ IFRS states: “The objective or general purpose of financial accounting is to provide
financial information about the reporting entity that is useful to existing and potential
investors, lenders and other creditors in making decisions about providing
resourcing to the entity”.
§ Financial Statement must:
o Report the state of affairs and business of the company.
o Reflect assets, liabilities, equity, income, and expenses.
o Not be misleading or incomplete.
o State whether they have been audited by an independent auditor or subjected to
an independent review.
3. DESIRABLE CHARACTERISTICS OF FINANCIAL STATEMENTS

• Making a difference to users

RELEVANCE
• Materiality

FAITHFUL • Unbiased and fair

REPRESENTATION • Complete and free of errors

• From one year to another

COMPARABILITY
• From one company to another

VERIFIABILITY • It must be supported by evidence

TIMELINES • There must be no unreasonable delay

UNDERSTANDABILITY • Not confusing

4. FACTORS AFFECTING THE FINANCIAL STATEMENTS

Financial Statements will

Important information not show any transactions
must be shown like of a personal nature
interest expense – cost
of borrowing money
Business
entity
Balance
sheet, assets
Materiality Historical valued at
cost original price

Conservative.
Income not GAAP
anticipated Going-
which has not Concern
yet been
received. Will Prudence
provide for Financial statements
losses like prepared on the basis that
bad debts. Matching the company will continue
operating in the foreseeable
future. Example, stock is
Income and expenses recorded in not valued based on the
the correct period. If goods are sold, amount of money that
the cost must be recorded at the would be received if it is
same time. sold in a short period
5. INTERESTED STAKEHOLDER
STAKEHOLDER REASON

Owners The shareholders of the company

Potential owner (prospective Interested in investing in the company, buying

shareholder) shares in the company.

Management The board of directors

Organisations who have lent money to the
company. They are interested in whether there
Financial Institutions are enough assets in the company to cover the
debts.
To see if the company is profitable. It will
Trade unions and employees provide job security. To negotiate wage and
salary increases.
A company is seen as a legal person and pays
South African Revenue Services company tax. They would want to see if the
company made a profit or loss.
Gives an opinion on the financial statements.
Independent auditor Interested in overall “health” of the business.
6. FORMAT OF AN INCOME STATEMENT

INCOME STATEMENT / STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED ………………………………………….
Note
Trading activity Sales xxx
– refer to trading Cost of sales (xxx)
account in Sales – cost of sales
General Ledger Gross profit xxx
Income from services rendered xxx
Fee income xxx
Commission income* xxx
Other operating income xxx
Operating Rent income xxx
activity – Profit on sale of fixed assets xxx
everything is
Gross profit
included + income from services rendered
except interest + other operating income
income and
interest
expense. Gross operating income xxx
Refer to the Operating expenses (xxx)
Profit and loss Salaries & wages xxx
account in the Maintenance NO BRACKETS xxx
general Stationery & printing REQUIRED WHEN xxx
ledger. Water & electricity LISTING xxx
Director fee EXPENSES xxx
Audit fee xxx
Gross operating income
– operating expenses
Operating profit xxx
Investing activity Interest income 1 xxx
Profit before interest expense xxx
Financing activity Interest expense (xx)
Net profit before income tax xxx
Company tax Income tax (xxx)
Net profit for the year 9 XXX
*Note that commission income may be shown under other operating income. Abide by
the guidelines of your examining body.
EXPENSES MUST BE SHOWN IN BRACKETS. MINUS IS SHOWN IN BRACKETS
MAIN PART IN THE INCOME STATEMENT

DIVIDENDS ON ORDINARY SHARES IS AN EXPENSE TO THE

COMPANY, IT SHOULD BE TAKEN TO THE RETAINED INCOME NOTE
7. FORMAT OF THE BALANCE SHEET AND NOTES TO THE BALANCE
SHEET

BALANCE SHEET / STATEMENT OF FINANCIAL POSITION ON

……………………..

ASSET = OWNER’S EQUITY + LIABILITIES Total asset = non-

current assets plus
current assets
ASSETS Note
Non-current assets xxx
Tangible / Fixed assets 3 xxx
Financial assets – Fixed deposit xxx
Current assets xxx
Inventories 4 xxx
Trade and other receivables 5 xxx
Cash and cash equivalents 6 xxx
TOTAL ASSETS XXX

EQUITY AND LIABILITIES

Shareholder’s equity xxx
Ordinary share capital 7 xxx
Retained income 8 xxx
Non-current liabilities xxx
Mortgage loan xxx
Current liabilities xxx
Trade and other payables 9 xxx Total equity and
Bank overdraft (if applicable) xxx liabilities = Capital
reserves + non-current
Current portion of loan/ short term loan liabilities + current
Shareholders for dividends liabilities
TOTAL EQUITY AND LIABILITIES XXX
IMPORTANT NOTICE:

§ Current portion of loan always subtracted from the Mortgage loan in non-current
liabilities and taken to short term liabilities.
§ If a Fixed deposit matures, always subtract the Fixed deposit in non-current assets
and taken to your short-term assets, cash, and cash equivalents.
§ Shareholders for dividends and current portion of loan can either appear on the face
of the Balance sheet or in Trade and other payables.
§ When asked to complete the face of the Balance sheet only, then all calculations
must be shown in brackets.
NOTES TO THE FINANCIAL STATEMENTS

INCOME STATEMENT

1. INTEREST INCOME
From investments xxx
From overdue debtors xxx
From cheque account xxx
XXX The total will go to
2. INTEREST EXPENSE the Income
On mortgage loan xxx statement
On bank overdraft xxx
XXX

BALANCE SHEET – NON-CURRENT ASSETS

3. FIXED ASSETS Land &

Vehicles Equipment Total
buildings
Carrying value at
xxx xxx xxx xxx
beginning
Cost xxx xxx xxx xxx
Accumulated
(xxx) (xxx) (xxx) (xxx)
depreciation
Movements xxx xxx xxx xxx
Additions at cost xxx xxx xxx xxx
Disposals at carrying
(xxx) (xxx) (xxx) (xxx)
value
Depreciation (xxx) (xxx) (xxx) (xxx)
Carrying value at end XXX XXX XXX XXX
Cost xxx xxx xxx xxx
Accumulated
(xxx) (xxx) (xxx) (xxx)
depreciation

The total will go to the Balance sheet

 BALANCE SHEET – CURRENT ASSETS

4. INVENTORIES
Trading stock xxx
Consumable stores on hand xxx
XXX Trade debtors minus
provision for bad debts
5. TRADE AND OTHER RECEIVABLES = Net trade debtors
Net trade debtors xxx
Trade debtors xxx
Provision for bad debts (xxx)
Income receivable / accrued xxx Net trade debtors +
Expenses prepaid xxx everything else = total
Deposit on water and electricity xxx
XXX
6. CASH AND CASH EQUIVALENTS
Fixed deposits (maturing within 12 months) xxx
Savings account xxx The total will go to
Bank xxx the Balance sheet
Cash float xxx
Petty cash xxx
XXX

BALANCE SHEET – SHAREHOLDERS EQUITY

Shares issued at different times at different prices, therefore ALWAYS at

AVERAGE PRICE.

7. ORDINARY SHARE CAPITAL

Max available AUHORISED
Xxx of authorised ordinary shares xxx
Actual in issue ISSUED
Xxx ordinary shares in issue in the beginning xxx
Movement Xxx ordinary shares of Rxx each
xxx
• Date order issued/repurchased during the year
• Repurchased Xxx ordinary shares of Rxx each
xxx
showed in issued/repurchased during the year
brackets Xxx ordinary shares in issue at the end xxx

The total will go to

the Balance sheet
 8. RETAINED INCOME
Repurchase of shares
Retained income at beginning of year xxx ALWAYS ABOVE
Net profit AFTER tax for the year xxx average price.
Repurchase of shares (xxx) Show calculations!!
Dividends on ordinary shares (xxx)
Paid xxx
Recommended xxx The total will go to
Retained income at the end of the year xxx the Balance sheet

§ Always show your working in brackets to earn part marks.

§ Repurchase of shared and dividends on ordinary shares MUST be shown in brackets.
§ FINAL dividends RECOMMENDED must be taken to note 9, Trade and other Payables
OR on the face of the Balance sheet under current liabilities.

BALANCE SHEET – CURRENT LIABILITIES

9. TRADE AND OTHER PAYABLES

Trade creditors xxx
Accrued expenses xxx Salaries and Wages:
Income received in advance xxx § Always the net
Creditors for salaries and wages xxx salary or wage.
§ All deductions and
SARS: PAYE xxx
contributions must
Medical aid fund xxx
be included.
UIF Fund xxx
Skills and development fund xxx
Pension fund xxx
* Current portion of loan/ short term loan xxx
* Shareholders for dividends xx The total will go to
xxx the Balance sheet

*Note: Can be shown as part of note 9 or can appear on the face of the Balance sheet
under current liabilities.
8. CASH FLOW STATEMENT
§ Indicate the MOVEMENT of cash.
o Did the bank balance INCREASE or DECREASE.
§ Provides users of financial statements with information of all financial resources during
a period, in particular, details of:
o Cash generated or utilised by Operating activities.
o Cash generated or utilised by Investing activities; and
o Cash generated or utilised by Financing activities.

INFLOW of CASH OUTFLOW of CASH

No brackets Brackets

THREE MAIN ACTIVITIES IN CASH FLOW STATEMENT:

OPERATING INVESTING FINANCING

ACTIVITY ACTIVITY ACTIVITY

Adjusting net profit

before tax, eliminate
non-cash items
The buying and The company needs
Paying expenses selling of fixed capital for growth
assets and development
Buying and selling of
stock

Payment from debtors

Payment from to
creditors Raise capital by
Investments made
borrowing money or
and investments
Payment of dividends selling shares to the
matures public

Payment of tax
 SOURCE - FINANCIAL STATEMENTS

INCOME BALANCE
STATEMENT SHEET

Step: Compare end of NOTES TO

BALANCE
previous year to current SHEET
year to determine inflow
or outflow of cash.

CASH FLOW STATEMENT

BASIC STEPS TO COMPLETE THE CASH FLOW STATEMENT

OPERATING INVESTING FINANCING

ACTIVITY ACTIVITY ACTIVITY

•Issuing of
•Adjusting net •Purchase and shares and the
profit before tax sale of fixed repurchase of
•Eliminate non- assets shares
cash items. •Increase or •Proceeds from
•Changes in decrease in loan and
working capital investement repayment of
•Interest paid loan
•Dividends paid
•Income tax paid

8.1 OPERATING ACTIVITIY

§ Items from the Income Statement
§ From the Balance Sheet and Notes:
o Note 4: Inventories
o Note 5: Trade and other Receivables
o Note 8: Retained Income
o Note 9: Trade and other Payables
ADJUSTING THE NET PROFIT BEFORE TAX

§ Note 1 in Cash Flow Statement: Reconciliation between profit before tax and cash
generated from operations.
§ The net profit BEFORE tax from the Income Statement or Appropriation account.
APPROPRIATION ACCOUNT
Income tax x Profit and loss x
Dividends on ordinary shares x Retained income x

Retained income x

§ Know how to calculate the Net profit before tax and the Net profit after tax using
percentages.
Example: If income tax is 28%
Income tax given: Net profit after tax given:
!"" !""
!"# = /01*2% &-. . !"# = !%& ()*+,& -+&%) . #$
%$

§ Elimating all non-cash items such as:

o DEPRECIATION - From Income Statement. If not given, can complete the
Tangible Asset T-Account at Book Value.
TANGIBLE ASSET AT BOOK VALUE
Balance b/d x Depreciation (Balancing figure) x

Additions at cost X Asset disposal x

Balance c/d x
Xx xx
Balance b/d x
o INTEREST EXPENSE is the cost of borrowing money, therefore a “financing
cost” and will be shown on the face of the Cash Flow Statement.
v If interest is NOT capitalized:
+ INTEREST EXPENSE -
BANK X Accrued expense x
(Balancing figure) (Balance end of last year)
Accrued expense x Profit and Loss x
(Balance end of this year) (Interest for 12 months)
Logical approach:

Amount due at the beginning xx

Amount from the Income Statement Xx
Amount due at the end of the year (xx)
Amount paid xx
 v If interest IS capitalized
+ INTEREST ON LOAN -
Loan X Profit and Loss x
(Interest for 12 months)

- LOAN +
Bank X Balance b/d x
(Capital + interest)
Balance c/d x Interest on loan x

Xx xx
Balance b/d x
The total interest on loan is equal to total amount paid.
v INTEREST INCOME will not form part of Grade 12 syllabis

WORKING CAPITAL
(Current assets – Current liabilities)
§ Note 1 in Cash Flow Statement: Reconciliation between profit before tax and cash
generated from operations.

BUYING AND SELLING OF STOCK

Balance Sheet Note 4: Inventories

§ An INCREASE in inventories will have an OUTFLOW affect.
§ A DECREASE inventories will have an INFLOW affect.
§ Example:
2021 2020 2021 2020
R5 000 R2 000 R3 000 R6 000
+ Inventories - + Inventories -

Balance 2 000 Balance 6 000 Decrease 3 000

Increase 3 000

Balance 5 000 Balance 3 000

+ Bank - + Bank -

Increase 3 000 Decrease 3 000

OUTFLOW INFLOW
EFFECT
EFFECT
PAYMENT FROM DEBTORS

Balance Sheet Note 5: Trade and other receivables

§ An INCREASE in debtors will have an OUTFLOW affect.
§ A DECREASE debtors will have an INFLOW affect.
§ Everything in Trade and other receivables is ADDED accept SARS: Income tax. This
will be calculated seperatly.
§ Example:
2021 2020 2021 2020
R8 000 R5 000 R9 000 R12 000
+ Debtors - + Debtors -

Balance 5 000 Balance 12 000 Decrease 3 000

Increase 3 000

Balance 8 000 Balance 9 000

+ Bank - + Bank -

Increase 3 000 Decrease 3 000

OUTFLOW INFLOW
EFFECT
PAYMENT TO CREDITORS EFFECT
Balance Sheet Note 9: Trade and other payables
§ A DECREASE in trade and other payables will have an OUTFLOW affect.
§ An INCREASE in trade and other payables will have an INFLOW affect.
§ Everyting in trade and other payables is ADDED accept:
o SARS: Income tax
o Shareholders for dividends
o Accrued expense if interest is not capitalized.
§ Example:
2021 2020 2021 2020
R7 000 R5 000 R4 000 R8 000
- Creditors + - Creditors +

Balance 5 000 Decrease 4 000 Balance 8 000

Increase 2 000

Balance 7 000 Balance 4 000

+ Bank - + Bank -

Increase 2 000 Decrease 4 000

INFLOW OUTFLOW

EFFECT EFFECT
PAYMENT IN DIVIDENDS

§ Appears on the face of the Cash flow Statement.

§ Will always be an OUTFLOW of cash.
§ Consist of dividends declared at the end of LAST YEAR and INTERIM dividends
paid.
§ From the RETAINED INCOME NOTE and TRADE AND OTHER PAYABLES.
§ Financial indicators like DIVIDENDS PER SHARE can be used to calculate figures
such as interim dividends.
Example: 3*&-4 5,6,5%057
DPS is 50c . 100 = 501
1 200 000

3*&-4 5,6,5%057 100. = 50 . 1 200 000

. 100 = 1%0&
0829%) *+ 7ℎ-)%7 . = 600 000

Total dividends minus dividends recommended end of this year = Interim dividends

- SHAREHOLDERS FOR DIVIDENDS +

BANK X Balance b/d x
Balance c/d x Dividends on ordinary shares x
Xx xx
Balance b/d x
+ DIVIDENDS ON ORDINARY SHARES -
BANK X Appropriation account x
(INTERIM DIVIDENDS)
Shareholders for dividends x
Xx xx
Logical approach:

Amount due at the beginning of the year xx

Total dividends paid and declared Xx
Amount due at the end of the year (xx)
Amount paid xx
PAYMENT OF INCOME TAX

§ Appears on the face of the Cash flow Statement.

§ Will always be an OUTFLOW of cash.
§ From the Balance Sheet:
o TRADE AND OTHER RECEIVABLES – SARS owes us (Debit balance) or
o TRADE AND OTHER PAYABLES – we owe SARS (Credit balance)
§ You may use the logical approach or you may do T-accounts.
TIP: USE T-ACCOUNT
Calculating income tax paid:

Example 1: 2021 2020

SARS: Income tax Credit Credit

Dr SARS: INCOME TAX Cr Logical approach:

BANK X Balance b/d x Amount due beginning of the year x

(Note 9: Payables)
(Note 9: Payables)
Income tax x Amount in the Income Statement x
Balance c/d x Amount due at the end of the year (x)
(Note 9: Payables)
xx xx
Amount paid xx
Balance b/d x
(Note 9: Payables)

Example 2: 2021 2020

SARS: Income tax Debit Credit

Dr SARS: INCOME TAX Cr Logical approach:

BANK X Balance b/d x Amount due beginning of the x

(Note 9: Payables)
year. (Note 9: Payables)
Income tax x Amount in the Income Statement x
x Balance c/d x Amount due at the end of the x
year (Note 5: receivables)
xx xx
Amount paid xx
Balance b/d x
(Note 5: receivables)

Example 3: 2021 2020

SARS: Income tax Debit Debit

Dr SARS: INCOME TAX Cr Logical approach:

Balance b/d x Amount due beginning of the (x)

(Note 5: receivables)
year. (Note 5: receivables)
BANK X Income tax x Amount in the Income Statement x
x Balance c/d x Amount due at the end of the x
year (Note 5: receivables)
xx xx
Amount paid xx
Balance b/d x
(Note 5: receivables)
 Example 4: 2021 2020
SARS: Income tax Credit Debit

Dr SARS: INCOME TAX Cr Logical approach:

Balance b/d x Amount due beginning of the (x)

(Note 5: receivables)
year. (Note 5: receivables)
BANK X Income tax x
Amount in the Income Statement x
Balance c/d x Amount due at the end of the (x)
year (Note 5: receivables)
xx xx
Amount paid xx
Balance b/d x
(Note 9: payables)

8.2 INVESTING ACTIVITY

§ The purchase of fixed assets and the disposal of fixed assets.
§ Investment made or an investment mature.
§ From the FACE OF THE BALANCE SHEET and the TANGIBLE ASSET NOTE.
§ Note 3: Tangible Assets and Asset disposal can be integrated into cash flow
statement.
INFLOW OF CASH OUTFLOW OF CASH
v Sale of tangible asset at v Purchase of tangible assets.
CARRYING VALUE (book value) v Investment placed
v Investment mature
HOW TO CALCULATE THE CASH EFFECT FROM TANGIBLE ASSETS
TANGIBLE ASSET AT BOOK VALUE
Balance b/d x Depreciation x

Additions at cost X Asset disposal x

(OUTFLOW) (INFLOW)
Balance c/d x
Xx xx
Balance b/d x

Book value at the beginning X Always look at

the information
Add: Asset purchased X (OUTFLOW) given. Fill in the
information given
Less: Asset disposal (x) (INFLOW)
and find the
Less: Depreciation (x) missing figures.

Book value at the end of the year x

 HOW TO CALCULATE THE CASH EFFECT FROM THE INVESTING ACTIVITY

Example 1: 2021 2020

Fixed deposits 200 000 150 000
Dr FIXED DEPOSIT Cr
Balance b/d 150 000 Balance beginning 150 000

BANK 50 000 Balance c/d 200 000 ADD: Amount 50 000

(OUTFLOW) invested
(OUTFLOW)
200 000 200 000
Balance end 200 000
Balance b/d 200 000

Example 2: 2021 2020

Fixed deposits 400 000 600 000
Dr FIXED DEPOSIT Cr
Balance b/d 600 000 BANK 200 000 Balance beginning 600 000
(INFLOW)
LESS: Amount (200 000)
Balance c/d 400 000 matured (INFLOW)

600 000 600 000 Balance end 400 000

Balance b/d 400 000

8.3 FINANCING ACTIVITY

§ If a company needs capital, they have TWO options:
1. Raise capital by selling shares
2. Borrow money at a financial institution.
§ The financing activity consist of:
o Proceeds from selling of shares
o Repurchase of shares
o Proceeds from long term borrowings
o Repayment of loan
§ The repayment of loan is always EXCLUDING interest. Interest paid forms part of
the OPERATING ACTIVITY.
§ The repurchase of shares is always the TOTAL AMOUNT PAID.
§ Information obtained from:
o The face of the Balance sheet
o Note 7: Ordinary share capital
o Note 8: Retained income
§ The Ordinary share capital note and the Retained income note can be incorporated
into Cash Flow Statement.
INFLOW OF CASH OUTFLOW OF CASH
v Raising capital – Issuing of shares v Repurchase of shares
v Raising loans v Repayment of loan
HOW TO CALCULATE THE PROCEEDS FROM ISSUING SHARES AND THE REPURCHASE OF SHARES

FINANCIAL STATEMENTS: BALANCE SHEET

Dr ORDINARY SHARE CAPITAL Cr
BANK X Balance b/d x ORDINARY SHARE CAPITAL
(OUTFLOW) Authorised share capital
Balance c/d x BANK X
XXX Ordinary shares
(INFLOW)
Issued share capital
xx xx
Xx Ordinary shares at beginning of year xx
Balance c/d
Xx Ordinary shares issued during the year. xx
Dr RETAINED INCOME Cr
(xx) Ordinary shares repurchased during the year. (xx)
BANK X Balance b/d x
(OUTFLOW) Xx Ordinary shares at the end of the year xx
Balance c/d X Appropriation X
RETAINED INCOME
xx xx
Retained income at the beginning of the year xx
Balance c/d
Net profit after tax for the year xx
Repurchase of shares (xx)
BANK (CFS)
(TOTAL PURCHASE PRICE) Dividends on ordinary shares: (xx)
Paid xx
AVERAGE PRICE ABOVE AVERAGE Declared xx
(NOTE7: OSC) (NOTE 8: RI) Retained income at the end of the year xxx

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8.4 FORMAT OF THE CASH FLOW STATEMENT
NAME OF THE COMPANY…………
CASH FLOW STATEMENT FOR THE YEAR ENDED………….
NOTES R Financial
Statements
Cash effects of operating activity xxxx
Cash generated/(utilised) from operations 1 xx
Interest paid (xx)
Dividends paid 3 (xx)
Income Tax paid 4 (xx)

Cash effect of investing activity xxx

Purchase of fixed assets (xx) Balance
Proceeds from the sale of fixed assets xx sheet &
Investment matured/(placed) xx Note 3

Cash effect of financing activity xxx

Proceeds from shares issued xx
Balance
Repurchase of shares (xx)
sheet &
Proceeds from long-term borrowings xx
Note 7&8
Repayment of loan (xx)

Net change in cash and cash equivalents 2 xxx Note 6 /&

Cash and cash equivalents in beginning 2 xx Bank
Cash and cash equivalents at the end 2 xxx overdraft
§ Make sure your brackets are correct.
§ Show calculations in brackets if notes are not required.

NOTES TO THE CASH FLOW STATEMENT

COMPULSORY
1 Reconciliation between profit before taxation
and Cash generated from operations.
Profit before taxation xx
Adjustment for: Income
Depreciation xx Statement
Interest expense xx
Operating profit before changes in working capital xx
Cash effects of changes in working capital xx
(Increase)/Decrease in inventory xx Note 4
(Increase)/Decrease in receivables xx Note 5
Increase/(Decrease) in payables xx Note 9
Cash generated from operations xx

The total will go to Cash Flow Statement

21
 COMPULSORY
2 Cash and cash equivalents Net Change Year 2 Year 1
Bank/ (Bank overdraft) xx xx xx
Cash float xx xx xx Balance in
Petty cash xx xx xx the
beginning
xxx xxx xxx

Cash Flow Statement Balance in

the
§ Be careful with the bank overdraft!!! beginning

Example: Bank overdraft

CASH AND CASH EQUIVALENTS 2021 2020

Bank 24 000 0
Cash float 500 500
Petty cash 1 000 1 000
25 500 1 500

CURRENT LIABILITIES 2021 2020

Bank overdraft 0 18 000
SOLUTION
Cash and cash equivalents Net Change 2021 2020
Bank 42 000 24 000 (18 000)
Cash float 0 500 500
Petty cash 0 1 000 1 000
42 000 25 500 (16 500)

Beginning End
(R16 500) 0 R25 500 Must be
ADDED
+ R16 500 + R25 500

Cash INCREASED with R42 000 to end

up with a favourable balance of R25 500.

22
 WORKINGS – MAY CHOOSE TO COMPLETE THE LOGICAL APPROACH OR
T-ACCOUNT. DECIDE ON ONE OPTION!!!
3. Dividend paid
Amount due at the beginning of the year xx Balance sheet,
Note 8,
Total dividends paid and declared xx
Appropriation
Amount due at the end of the year (xx) account.
Amount paid xx

§ The amounts can be shown:

Cash Flow
Dividend paid Statement
Amount due at the beginning of the year (xx)
Total dividends paid and declared (xx)
Amount due at the end of the year xx
Amount paid (xx)

4 Income Tax paid

Amount due at the beginning of the year xx Balance sheet,
Note 5 & 9,
Amount from the Income Statement xx
Income
Amount due at the end of the year (xx) Statement
Amount paid xx

§ The amounts can be shown: Cash Flow

Income Tax paid Statement
Amount due at the beginning of the year (xx)
Amount from the Income Statement (xx)
Amount due at the end of the year xx
Amount paid (xx)

23